TPAS Vs. Health Plans

Third Party Administrators, or TPAs, are at the center of self-insured health insurance plans. TPAs enable companies to sponsor self-insured group health plans instead of turning to an insurance company to provide health insurance.

TPAs and Self-Insured Plans

• With a self-insured plan, the company replaces the insurance company, establishes rates, collects premiums and pays the employees' medical bills. Employer and employee premiums are paid into a company-owned pool to pay for medical services. TPAs are responsible for payment of claims from this pool consistent with the company's health plan.

TPAs Customize Health Plans

• TPAs allow employers to have customized health plans. Instead of a predetermined plan from an insurance company, the employer and TPA tailors a health plan for the needs of their group as to:

  • copays for office visits, prescriptions, inpatient, outpatient and ER services

  • the type of deductible (annual or general plan)

  • use of a bi-level or multi-level rate plan

  • the annual out-of-pocket maximum

TPAs in America

• Sixty percent of nonfederal workers are in health plans that use a TPA. An estimated 4,000 TPAs exist in America. The national association is the Society of Professional Benefit Administrators.